I translated a great piece of essay by Kickdefella on “The Truth About Fuel Subsidy”here last Thursday. In that essay, Kickdefella explained his finding how the government actually never include fuel subsidy in the government budget/expenditure and we had been blinded all this while thinking there is such allocation for it and yet we were told this country is ‘suffering’ or would go bankrupt because of the fuel subsidy.

On Monday, Shahrir Samad, Minister of Domestic Trade and Consumer Affairs confirmed this finding. There is NO FUEL SUBSIDY (AND FOOD TOO) in the treasury reports and also not included in the budget!!! Here is the latest post by Kickdefella.

It is true; fuel subsidy was never in the government budget. It is not just that, even the food subsidy was also never in the budget. As a result, it is an expenditure ‘unaccounted for’ or, an expenditure that never being paid by the government. As a result, fuel and (today we knew that) food subsidy too are not something that government had to pay for from either taxpayer money or from any other government income.

With that Shahrir confirmed Kickdefella’s finding that fuel subsidy (and food too) is not in the treasury reports and also not included in the budget.

Shahrir however contradict himself when he points out that, “Add food and fuel and it (the subsidy spent) came to over RM30 B”.

There seems Shahrir himself is getting dumber and dumber each day.

• How can government spent RM30B extra without reporting it to Parliament.
• How can government used extra RM30B and it goes unrecorded in the Treasury records.
• Why did the government did not reveal the real amount she spend or planning to spend it in the budget when they presented it to the Parliament each year.
• The Second Finance Minister, Nor Yakcob claimed the government spent RM35B alone for fuel subsidy but Shahrir claimed RM30B and that already included food subsidy too.• What is the actual amount the government spent on subsidy?
• Is there other subsidy too that the government spent such as “Subsidy for Abdullah’s daily usage of diapers” or “Rosmah’s C4 allocation” which goes unrecorded?
• Do the government actually spend money for subsidy?

My fellow Malaysian, does the government actually spend money on subsidy?

My findings show that the amount of subsidy which government claimed totalling from RM30B to RM50B depending on whose big mouth you want to believe is not recorded anywhere. If the government actually spend those amounts, it should be listed in their reports.

Whose money does the government actually spend?

My findings lead us to only one outcome in regards of the fuel subsidy. The ‘subsidy’ actually came from the exchange of crude oil by Petronas. And as nobody shoots me down on this, I tend to say that I am almost correct about it. Maybe 99% correct and if I was wrong, it is only on the details of the exchange.

This will mean,

• Whenever the crude oil price increase, our crude oil price too increase.
• Let put it this way, X is the market price for crude oil that we import.
• Y is the market price for crude oil that we export. The reason our price is Y because ours are Sweet and Light and it is called the ‘Tapis Blend’ which is the most expensive grade in the market.

When the price in the market increase, it will mean that,

• X prices increase.
• Y prices increase.

So why do we spend more money to meet local demand when the market price increase?

The answer is we do not. Yes, we do not spend extra money to get the crude oil we need for local market.

(Petronas has done a wonderful job. It is undeniably that we owe this to those hardworking yet underpaid Petronas staff.)

As a result I do not understand why certain politician from the opposition are blaming Petronas and wants to demonstrate in front of the Twin Tower. They should indeed demonstrate (if they know nothing better to do) in front of the Treasury or in front of Abdullah’s Seri Perdana.

But if I am them, I would just get my facts right and pursue the matter in more civilise manner.

• Try to take some sort of court order to try to stop the government from doing what they are doing. Don’t ask me on what ground they should do it. They are the one who is getting paid for being the ‘Wakil Rakyat’.
• Our judiciary system is much more independent now, right?
• We just paid those ‘rebel’ judges undisclosed amount as ex gratia payment so all the judges should not be worried, because if they go against the government, one day, they will get extra earnings for it.
• File police report if you trust the police.
• File report with the human rights commission because Malaysian has lost certain expect of their rights by the increase in fuel prices.

Last but not least, organise a road show all over the country and explain the truth to the people. They are best at ‘ceramah’ right?

And after that road show, lets gathered 1 million or more Malaysian to peacefully walk to Seri Perdana and all the Minister’s house and demand they reduce back the price of fuel.

I shall be there. I know my readers will be there too.

***************************************************

Now may I add to the well written post by Kickdefella. I quote Mr. Shahrir Samad:

He said since the 9th Malaysia Plan was a development plan, and not about operational expenses, spending on subsidies was treated as an ad-hoc expense instead of a planned one.

“But now it will definitely become a big part of the budget in terms of government spending,” he said, adding that money was also spent to harmonise prices between East and West Malaysia.

What? You mean before this.. all this while spending on subsidies was NEVER treated as A BIG PART of the government spending?? Just as ad-hoc expense instead of a planned one? That is very very shocking! Let me pull out the numbers for you. I quote Foong Wai Fong (he is the director of Megatrends Asia, best-selling author of ‘Megatrends Asia’ (with John Naistbitt), ‘The New Asian Way’, ‘Mr Prime Minister We Have to Talk’, and ‘Culture Is Good Business’.) in his article “Economy in Jeopardy”:

……the fuel subsidy of RM43 billion is three times the revenue derived from personal income tax of RM13.4 billion and over 20 percent more than the forecast corporate tax of RM34.8 billion. In total, the fuel subsidy is almost 50 percent of the estimated federal government revenue of RM102 billion.

As Foong has shockingly quantified for us above, the government’s current fuel expenditure (subsidy) is RM43 billion whilst the corresponding income is only RM 13.4 billion. I am a bit too confused over the figure of fuel subsidy, at one time it is RM40B, then RM35B then RM30B thanks to the government brilliant tai-chi masters, but let me just use the least figure quoted from the horse’s mouth – RM30B. Still, this is a very big figure if you take into account of government revenue as highlighted above.

Let’s assume the estimated federal government revenue of RM102B is acceptable, this RM30B is almost 30 percent of it!!! Yet, the government is treating spending on subsidies as ad-hoc spending and not treated as a big part of the government spending?????!! Got it? To quote Foong again:

The populist approach in Malaysia is to give out candy. It is easier for bureaucrats to do this than to think out real solutions. Unlike in business, bureaucrats spend money without demanding a return, businesses ask for a return before they disburse funds.

This view is best summed up by a foreign diplomat: “Malaysia manages its economy in the political way – talking and making slogans about things, dishing out money so all are relieved, but not asking tough questions and working hard to find solutions.”

I rest my case.

ps: Whoever comes in and writes useless comments like “Wah so long… ” you better think before you do it. Save it for yourself, before you need to be saved…